Electric cooperatives already join together to obtain financing, insurance and other services to achieve economies of scale.
So why aren’t they doing more of it for microgrids and distributed energy?
That’s the question raised by Keith Taylor, who teaches at UC Davis and studies cooperatives, rural sociology, and institutional economics in the most recent Energy Changemakers podcast. Co-ops have started working together in the microgrid space, he says, but have yet to build anything like the shared infrastructure they created for capital and insurance.
The result could be something approaching a national microgrid support system: locally controlled electric cooperatives backed by organizations that can better finance projects, develop standards, and perhaps even become trusted providers of distributed energy services beyond their traditional territories.
“Just as these electric cooperatives have federated for finance, for insurance, marketing, renewable energies, they could do that with microgrids,” Taylor said. “In doing this, they could become a trusted vendor for communities looking at developing microgrid infrastructure.”
Electric co-ops operate across most states and already collaborate extensively. As Taylor sees it, that gives them an unusual laboratory for determining what workable microgrid and DER practices look like across very different regions. It also makes them known quantities to consumers confused about the array of technologies and players now before them.
Co-ops could move beyond their territories
Taylor’s idea becomes more provocative when he considers what co-ops might do outside their traditional service areas.
He envisions them moving beyond their boundaries into investor-owned utility service territories to act as distributed energy purveyors — organizations that would help consumers, for example, install solar and then coordinate the output for sale back to the incumbent utility.
In that scenario, the cooperative isn’t necessarily replacing the existing utility. Instead, it becomes an intermediary between hundreds or thousands of distributed resources and the grid.
Taylor says that could actually make it easier for the incumbent utility as it tries to incorporate distributed energy into its grid planning. Instead of dealing with large numbers of individual systems, the utility could deal with one coordinating institution.
“The electric cooperatives could actually provide services in other incumbent service territories on behalf of those consumers to sell power back to an investor-owned utility,” Taylor said.
For rural cooperatives, he sees another benefit: economic development. Services sold outside the territory could create a new source of economic activity that ultimately flows back to the cooperative’s home communities.
An overlooked form of energy democracy
Taylor’s enthusiasm for cooperatives isn’t really about a particular utility business model. It grows from a much broader idea about how economies and societies should work.
His intellectual roots are in the work of Nobel Prize-winning political economist Elinor Ostrom, whose research explored how people build institutions to collectively manage shared resources.
Taylor argues that public debate tends to recognize two main actors: markets and government. In his view, there is a third: civil society. It includes cooperatives, nonprofits, employee-owned companies and other institutions that operate alongside markets and government but follow different incentives.
Taylor describes society as a “three-legged stool” consisting of the market, the state and civil society. Cooperative enterprises occupy that third space, combining economic activity with community ownership and collective decision-making.
Electric cooperatives are a particularly important example because they already operate at significant scale. The United States has more than 800 electric cooperatives serving about 42 million people, Taylor noted. Thousands of Americans sit on their governing boards.
“We actually have energy democracy in the United States,” he said.
In other words, Taylor isn’t proposing that the country invent an entirely new democratic energy institution. He believes electric cooperatives already demonstrate the idea and offer “latent community capacity.”
Once communities recognize that capacity, he argues, cooperatives can become vehicles for pooling purchasing power, coordinating distributed resources and allowing consumers to become active participants in electricity markets rather than simply purchasers of power.
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